Writing Teller Training and Procedures 2015

Transcription

1 Writing Teller Training and Procedures 2015 Teller Handbook Presented by: Deborah Crawford with Gettechnical Inc. 0 Instructor Deborah L Crawford Debbie is the President of Gettechnical Inc, a Virginia based training company. Her combined banking and training experience began in 1984 and she is a deposit side expert. She received her Bachelors and Masters degrees from Louisiana State University. If you have any questions just call or us at gettechnical@msn.com. Gettechnical Inc. 1 1

2 Lesson 1: Developing Qualities of a Star Teller 2 Goals Everyone should have the training they need to complete their job The training should make sense for that particular job The training should be effective and move each person ahead in their job skills It must fit in the budget 3 2

3 Each job has different skill sets Compliance Training Technical Skills 1 2 Personal Skills Sales Skills Source of Training Orientation Online Training Telephone/Web Programs Classroom Style, In-Bank Seminars at State Banking Groups Touch-up Training (Auditor Findings) s, Games, etc. 5 3

4 Tellers 6 What does a Teller do at your bank? Handles cash Takes deposits and makes withdrawals Protects the bank from fraud 7 4

5 Tellers Regulation CC Regulation E Regulation DD Regulation D Privacy Identity Theft BSA training Debit cards/atm cards/credit cards How to count money and balance Safe Deposit Box training Computer Training UCC 3 and 4 on Checks, Endorsements, Treasury Checks, Substitute checks, RCC Ownership training Robbery, counterfeit money 8 Building the Best Teller Do a survey and ask each manager and teller what skills are needed to be the best at their job. Take the survey and the compliance requirements and then start looking for the training. 9 5

6 Who Should Be Trained in Core Procedures Track 1? Teller A 1 A 2 A 3 A 4 A 5 A 6 A 7 A 8 A 9 A 10 A 11 Betty Smith Stan Smith Gloria Hernandez Bob Spitzer Rhonda Goodman Kathy Lewis Shari Jones Tom Oneiko 10 Who Should Be Trained in Core Procedures Track 2? Teller B 1 B 2 B 3 B 4 B 5 B 6 B 7 B 8 B 9 B 10 B 11 Betty Smith Stan Smith Gloria Hernandez Bob Spitzer Rhonda Goodman Kathy Lewis Shari Jones Tom Oneiko 11 6

7 Who Should Be Trained in Core Procedures Track 3? Teller C 1 C 2 C 3 C 4 C 5 C 6 C 7 C 8 C 9 C 10 C 11 Betty Smith Stan Smith Gloria Hernandez Bob Spitzer Rhonda Goodman Kathy Lewis Shari Jones Tom Oneiko 12 Lesson 2: Overview of Negotiable Instruments 13 7

8 Most signature cards have five basic components: 1 OWNERSHIP Individual Joint Trust/POD Other 2 TITLE 3 FEDERAL REGULATIONS 5 TAXPAYER IDENTIFICATION NUMBER 4 SIGNATURES (Access) 14 Signature cards must be consistent. Ownership Single Party or individual Joint Trust/POD Other Must Match Title Must Match Signatures 15 8

9 NEGOTIABLE INSTRUMENTS A negotiable instrument means an unconditional promise or order to pay a fixed amount of money. It can be made payable to bearer or to order. It is important to identify the indorser when instrument is being cashed and not deposited to an account of the payee. Examples of negotiable instruments are Checks, cashier s checks, traveler s checks, certificate of deposit, These items should be signed with the maker, drawer, or authorized signature in accordance with the signatures on the signature card on file. If an instrument contains contradictory terms, typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers. 16 Payee Written amount Date Figure Authorized Signature Routing # Account # Check # 17 9

10 CONTRADICTORY TERMS If an instrument contains contradictory terms, typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers. March 31, XXXX Sally Smith 1, One Hundred & /100 Dan Black 18 AND/OR CHECKS If an instrument is an or check either pay or indorse the check. If the check is an and check all payees must indorse. If it is ambiguous, then it is considered an or check. You will want to be careful with government checks and insurance drafts and make sure all parties indorse as the check is made out. March 31, XXXX Sally or Bob Smith Ten & /100 Dan Black 19 10

11 March 31, XXXX Sally and Bob Smith Ten & /100 Dan Black March 31, XXXX Sally and/or Bob Smith Ten & /100 Dan Black 20 INCOMPLETE INSTRUMENTS If an instrument is left blank and later completed it is usually valid. The signer would have to prove that they were not added with his or her permission to invalidate the contract. Sally Smith March 31, XXXX Dan Black 21 11

12 ORDER CHECKS/BEARER CHECKS An order check is payable to an identifiable person or thing. A bearer check is made payable to cash. 22 SAMPLE OF AN ORDER CHECK March 31, XXXX Sally Smith Ten & /100 INDORSE HERE X DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY Dan Black 23 FEDERAL RESERVE B AND REGULATION CC 12

13 SAMPLE OF A BEARER CHECK March 31, XXXX Cash Ten & /100 INDORSE HERE X DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY Dan Black 24 FEDERAL RESERVE B AND REGULATION CC Lesson : Indorsements Overview 25 13

14 INDORSEMENTS An "Indorsement" means a signature, other than that of a signer as maker, drawer, or acceptor, that is made on an instrument for the purpose of (i) negotiating the instrument, (ii) restricting payment of the instrument, or (iii) incurring indorser's liability on the instrument There are four types of Indorsements 1. Blank check indorsed by payee INDORSE HERE X Sally Smith DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY 2. Special check is indorsed by payee and made payable to identified person INDORSE HERE X Sally Smith pay to Cindy Jones DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY 26 INDORSEMENTS 3. Restrictive For Deposit Only INDORSE HERE X For Deposit Only Sally Smith DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY 4. Qualified Without Recourse INDORSE HERE X Without Recourse Sally Smith DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY 27 14

15 SAMPLE OF A BLANK INDORSEMENT March 31, XXXX Sally Smith Ten & /100 Dan Black INDORSE HERE X Sally Smith DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY FEDERAL RESERVE B AND REGULATION CC 28 SAMPLE OF A SPECIAL INDORSEMENT March 31, XXXX Sally Smith Ten & /100 Dan Black INDORSE HERE X Sally Smith pay to Cindy Jones DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY FEDERAL RESERVE B AND REGULATION CC 29 15

16 SAMPLE OF A RESTRICTIVE INDORSEMENT March 31, XXXX Sally Smith Ten & /100 Dan Black INDORSE HERE X For Deposit Only Sally Smith DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY FEDERAL RESERVE B AND REGULATION CC 30 SAMPLE OF A QUALIFIED INDORSEMENT March 31, XXXX Sally Smith Ten & /100 Dan Black INDORSE HERE X Without Recourse Sally Smith DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY FEDERAL RESERVE B AND REGULATION CC 31 16

17 Lesson : Indorsements: Special Accounts 32 FIDUCIARY ACCOUNTS Definition: When one person is named to act for another by contract, by law, by court or other legal arrangement they are considered in a fiduciary capacity

18 FIDUCIARY ACCOUNTS Type 1. Authorized Signers, Agents Inhouse Power of Attorney 2. Power of Attorney Outside Document Set up by Signature card or attachments Outside contract 3. Custodians On signature card through state law 4. Social Security Representative Payees 5. Executors/Administrators Court 6. Guardians and Conservators Court 7. Trustees Contract On check by Social Security 34 GENERAL RULES FOR FIDUCIARY ACCOUNTS 1. No PODs may be attached to these accounts No other authorized signers or power of attorneys may be listed on accounts numbers Except for authorized signers, the type of ownership is not individual or joint but fiduciary or the specific ownership for each category on your platform system. If you have cards, check the other box and list the type of fiduciary. 4. Fiduciaries should sign name and job title. For example, Jane Smith, trustee

19 FLOWCHART: FIDUCIARY - OVERVIEW When one person is named legally to act for another Powers of Attorney UTMA Social Security Rep. Payee Estates Powers of Attorney act for owner Custodian acts for child Rep. Payee acts for beneficiary/ owner Executor or Administrator acts for decedent Set up by contract Set up by state law and signature card Set up by Social Security Set up by court and by will Signers allowed as per signature contract No other signers allowed No other signers allowed No other signers allowed 36 FIDUCIARIES AS INDORSERS When one person is named to act for another by contract, by law, by court or other legal arrangement they are considered in a fiduciary capacity WHO ARE THEY ACTING FOR? WHO ARE THEY? WHAT IS THE CAPACITY? 37 19

20 MINOR ACCOUNTS AND CHECKS 38 Options for Children #1 #2 UTMA Child owns Child s SSN Custodian Signs Child has no access Joint Account Child Owns as coowner may Use child s SSN Child signs Child has access Styling: Little Johnnie, a minor by Sally custodian under UTMA Styling: Little Johnnie or Sally or Bob Ownership: UTMA Ownership: Joint 39 20

21 UNIFORM TRANSFER TO MINORS ACT (UTMA) Under UTMA a custodian may want to set money aside for the minor as an irrevocable gift. money belongs to the child If the custodian withdraws any of the money it must be used for the benefit of the child. Upon age 18-25, the funds will be turned over to the child Only one custodian and one child are allowed per account. On child s death, funds go to child s estate On death of custodian, the guardian of the child will name a successor custodian if child under 14. If child is 14, the child can name the new custodian within sixty days. 40 Checklist for UTMA Checks Identification on custodian Indorsement by custodian Checks can be deposited into the account Custodian can withdraw from the account 41 21

22 SAMPLE CHECK #1 Johnnie Smith is the minor and Sally Smith is the custodian. How would the custodian indorse the check? March 31, XXXX Johnnie Smith Ten & /100 Bill Smith INDORSE HERE X DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY FEDERAL RESERVE B AND REGULATION CC 42 SAMPLE CHECK #2 Sally Smith is given this check for Johnnie s birthday. She wants to deposit it into the UTMA account. How should she indorse the check? Or is there another option? March 31, XXXX INDORSE HERE X Sally Smith Ten & /100 DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY Bill Smith FEDERAL RESERVE B AND REGULATION CC 43 22

23 Death of Customer Probate Assets Non Probate Assets Individual or Single party Accounts Sole Proprietorships IRAs with no beneficiaries Joint WOROS Accounts POD Accounts Living Trusts IRAs with beneficiaries JTWROS Need Letters of Testamentary or Letters of Administration and Death Certificate Need Death Certificate Set up Estate Account Pay Beneficiaries or Owners 44 Powers of Attorney Agents, convenience signer or authorized signers In house Powers of Attorney Out of house Powers of Attorney Provided usually on financial institution signature card Provided by financial institution Provided by customer Usually restricted to one particular account and can only make transactions while owner is alive Usually can act on more than one account, but not on all accounts. Must be revoked at the bank in person. Can act as Power of Attorney document states and usually can be revoked many ways

24 SOCIAL SECURITY REPRESENTATIVE PAYEE Description A Social Security account is an account for a person receiving Social Security benefits who is unable to act on their own behalf. The Social Security Administration has named a representative payee to act for the person. This can be for minor children or adults who are unable to act for themselves. The representative payee is the person with access to the funds and the other named individual on whose behalf they are acting is the actual owner of the account. Insurance Insured under social security recipient's individual coverage. 46 Checklist for Social Security Representative Payee Valid identification on representative payee Is representative payee cashing the check? Is the representative payee a parent? If the representative payee is a parent, the check can be deposited into parent s account. Otherwise it has to go into savings with the child s name on the account

25 SAMPLE CHECK #1 How does a representative payee indorse the back of the check? INDORSE HERE March 31, XXXX X Sally Smith for Betty Smith Ten & /100 DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY Bill Smith FEDERAL RESERVE B AND REGULATION CC 48 SAMPLE CHECK #2 If the representative payee is depositing the check, how would the check be indorsed? INDORSE HERE March 31, XXXX X Sally Smith for Betty Smith Ten & /100 DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY Bill Smith FEDERAL RESERVE B AND REGULATION CC 49 25

26 BUSINESS ACCOUNTS - EASY AS 1, 2, 3 1 Outside Government Document & Agreements Provided by customer to back the resolution 2 Resolution Authorizes the Signature Card 3 Signature Card Signed by those authorized on the resolution Person authorized to open account 1. We need proof that the business exists. 2. We need to identify the person who signs at the bottom of the resolution. 3. The resolution provides who can sign on the signature card. 50 Checklist for Sole Proprietorship The Sole Proprietor is the only business type of account where the owner can cash the check if we have paperwork on file that identifies them as the owner. Most banks do not cash checks even for the sole proprietor. Instead we ask them to deposit and write a check out. Valid identification on sole proprietor Anyone authorized on the signature card and resolution can write checks on the business 51 26

27 Most signature cards have five basic components: 1 OWNERSHIP Partnership 2 TITLE Johnson Enterprises 3 FEDERAL REGULATIONS 5 TAXPAYER IDENTIFICATION NUMBER EIN of Partnership 4 SIGNATURES (Access) William Smith, Signer Betty Johnson, Partner Sue Johnson, Partner 52 SAMPLE CHECK How should this check be indorsed? Can it be cashed? Can it be deposited into a personal account? INDORSE HERE March 31, XXXX X Johnson Enterprises Ten & /100 DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY Bill Black FEDERAL RESERVE B AND REGULATION CC 53 27

28 Most signature cards have five basic components: 1 OWNERSHIP Partnership 2 TITLE Johnson Enterprises, Ltd. 3 FEDERAL REGULATIONS 5 TAXPAYER IDENTIFICATION NUMBER EIN of Partnership 4 SIGNATURES (Access) William Smith, Signer Betty Johnson, Partner Sue Johnson, Partner 54 SAMPLE CHECK How should this check be indorsed? Can it be cashed? Can it be deposited into a personal account? INDORSE HERE March 31, XXXX X Johnson Enterprises, Ltd Ten & /100 DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY Bill Smith FEDERAL RESERVE B AND REGULATION CC 55 28

29 Most signature cards have five basic components: 1 OWNERSHIP Corporation 2 TITLE Johnson Enterprises, Inc. 3 FEDERAL REGULATIONS 5 TAXPAYER IDENTIFICATION NUMBER EIN of Corporation 4 SIGNATURES (Access) William Smith, Signer Betty Johnson, Partner Sue Johnson, Partner 56 SAMPLE CHECK How should this check be indorsed? Can it be cashed? Can it be deposited into Betty s personal account? Can she get less cash? INDORSE HERE March 31, XXXX X Johnson Enterprises, Inc Ten & /100 DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY Bill Smith FEDERAL RESERVE B AND REGULATION CC 57 29

30 Most signature cards have five basic components: 1 OWNERSHIP LLC 2 TITLE Jack Smith Smith Electronics, LLC 3 FEDERAL REGULATIONS 5 TAXPAYER IDENTIFICATION NUMBER EIN of LLC or SSN of Jack Smith 4 SIGNATURES (Access) Jack Smith, Single Member Sally Smith, Signer 58 Most signature cards have five basic components: Multi-Member LLC 1 OWNERSHIP LLC 2 TITLE Smith Electronics, LLC 3 FEDERAL REGULATIONS 5 TAXPAYER IDENTIFICATION NUMBER EIN of the LLC 4 SIGNATURES (Access) Jack Smith, Single Member Sally Smith, Signer 59 30

31 SAMPLE CHECK INDORSE HERE March 31, XXXX X Smith Electronics, LLC Ten & /100 DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY Bill Smith FEDERAL RESERVE B AND REGULATION CC 60 SAMPLE CHECK-NONPROFIT CORPORATION How should this check be indorsed? INDORSE HERE March 31, XXXX X Boy Scouts of America, Inc Ten & /100 DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY Bill Black FEDERAL RESERVE B AND REGULATION CC 61 31

32 SAMPLE CHECK- FORMAL NONPROFIT ORGANIZATION How should this check be indorsed? Can it be cashed? INDORSE HERE March 31, XXXX X Rotary of Baton Rouge Ten & /100 DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY Bill Black FEDERAL RESERVE B AND REGULATION CC 62 SAMPLE CHECK-INFORMAL NONPROFIT ORGANIZATION How should this check be indorsed? Can it be cashed? INDORSE HERE March 31, XXXX X The 1975 High School Reunion Ten & /100 DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY Bill Black FEDERAL RESERVE B AND REGULATION CC 63 32

33 SAMPLE CHECK- TRAGEDY/BENEFIT ACCOUNT How should this check be indorsed? Can it be cashed? INDORSE HERE March 31, XXXX X The Betty Black Burn Fund Ten & /100 DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY Bill Black FEDERAL RESERVE B AND REGULATION CC 64 SAMPLE CHECK- CAMPAIGN ACCOUNT How should this check be indorsed? Can it be cashed? INDORSE HERE March 31, XXXX X The Friends of Billy Bob Ten & /100 DO NOT SIGN/WRITE/STAMP BELOW THIS LINE FOR FINANCIAL INSTITUTION USAGE ONLY Bill Black FEDERAL RESERVE B AND REGULATION CC 65 33

34 Lesson : U.S. Treasury Checks 66 INDORSEMENT BY PAYEES General requirements. Checks shall be indorsed by the named payee or by another on behalf of such named payee as set forth in this part

35 Acceptable indorsements. A check is properly indorsed when: The check is indorsed by the payee in a form recognized by general principles of law and commercial usage for negotiation, transfer or collection of negotiable instruments. The check is indorsed by another on behalf of the named payee, and sufficiently indicates that the indorser has indorsed the check on behalf of the payee pursuant to authority expressly conferred by or under law or other regulation. An example would be: John Jones by Mary Jones. This example states the minimum indication acceptable. However, , , and (f) specify the addition of an indication in specified situations of the actual capacity in which the person other than the named payee is indorsing. 68 Absent a signature, the check is indorsed for collection or for deposit only to the credit of the within named payee or payees. The presenting bank shall be deemed to guarantee good title to checks without signatures to all subsequent indorsers and to Treasury. The check is indorsed by a financial institution under the payee's authorization

36 Indorsement of checks by a duly authorized fiduciary or representative. The individual or institution accepting a check from a person other than the named payee is responsible for determining whether such person is authorized and has the capacity to indorse and negotiate the check. Evidence of the basis for such a determination may be required by Treasury in the event of a dispute. 70 Indorsement of checks by a financial institution under the payee's authorization. When a check is credited by a financial institution to the payee's account under the payee's authorization, the financial institution may use an indorsement substantially as follows: Credit to the account of the withinnamed payee in accordance with the payee's instructions. XYZ [Name of financial institution]. A financial institution using this form of indorsement will be deemed to guarantee to all subsequent indorsers and to the Treasury that it is acting as an attorney-in-fact for the payee, under the payee's authorization, and that this authority is currently in force and has neither lapsed nor been revoked either in fact or by the death or incapacity of the payee

37 Indorsement of checks drawn in favor of financial institutions. All checks drawn in favor of a financial institution, for credit to the account of a person designating payment so to be made, must be indorsed in the name of the financial institution as payee in the usual manner. However, no check drawn in favor of a financial institution for credit to the account of a payee may be negotiated by the financial institution after the death of the payee. Unacceptable indorsements. A check is not properly indorsed when the check is signed or otherwise is indorsed by a person without the payee's consent or authorization. 72 Failure to include the signature of the person signing the check will create a rebuttable presumption that the indorsement is a forgery and is unacceptable. Failure to include sufficient indication of the indorser's authority to act on behalf of the payee will create a rebuttable presumption that the indorsing person is not authorized to indorse a check for the payee

38 Lesson : Substitute Checks 74 Front Back 75 38

39 FLOW CHART: OVERVIEW CHECK 21 - ALTERNATIVE TO PAPER CHECKS Send substitute check Depositary bank or other bank in clearing chain. TRUNCATE CHECK OR Electronic image with agreement from receiving institution. Remove the original check from check clearing process. 76 Opens Account Sends Customer a Statement Wal Mart Paying Bank Depositary Bank Truncated Check Image = Check Clearing Bank IRD = Image Replacement Document or Substitute Check *Can send images, IRD, or checks in statement 77 39

40 Depositary Bank Original Check Clearing Bank Original Check Paying Bank 78 Depositary Bank Original Check Clearing Bank Image Paying Bank 79 40

41 Depositary Bank Image Clearing Bank Paying Bank 80 Depositary Bank Image Clearing Bank Image Paying Bank 81 41

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44 86 Substitute Check Checklist Legal Equivalence Test Front and Back of Check are Accurate 1. Preprint information on drawee and paying bank including MICR line. 2. Payment instructions. 3. Other information such as identification on front and indorsements applied to back. Bears Legend This is a legal copy of your check. You can use it the same way you would use the original check

45 Substitute Check Warranty to Recipients 2 Part Legal Equivalence Test 1. Front and back are accurate 2. Bears Legend Do not have to pay check twice 88 Lesson : Stop Payments, Post-dated Checks, Staledated Checks And Other Check Issues 89 45

46 STOP PAYMENT ORDERS A stop payment order may be given by any one authorized to draw on the account. See signature card some agreements say any owner. Written order six months Oral order 14 calendar days No stop payment orders on cashier s, certified or teller s checks (in some states it is also money orders). 90 LOST, DESTROYED, OR STOLEN CASHIER S, TELLERS OR CERTIFIED CHECKS "Check" means a cashier's check, teller's check, certified check, or money order. "Claimant" means a person who claims the right to receive the amount of a cashier's check, teller's check, certified check, or money order that was lost, destroyed, or stolen

47 "Declaration of loss" means a written statement, made under penalty of perjury, to the effect that the declarer lost possession of a check, the declarer is the drawer or payee of the check, in the case of a certified check, or the remitter or payee of the check, in the case of a cashier's check, teller's check, or money order, 92 the loss of possession was not the result of a transfer by the declarer or a lawful seizure, and the declarer cannot reasonably obtain possession of the check because the check was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process

48 "Obligated bank" means the issuer of a cashier's check, teller's check, or money order, or the acceptor of a certified check. 94 A claimant may assert a claim to the amount of a check by a communication to the obligated bank describing the check with reasonable certainty and requesting payment of the amount of the check, if the claimant is the drawer or payee of a certified check or the remitter or payee of a cashier's check, teller's check, or money order, the communication contains or is accompanied by a declaration of loss of the claimant with respect to the check, 95 48

49 the communication is received at a time and in a manner affording the bank a reasonable time to act on it before the check is paid, and the claimant provides reasonable identification if requested by the obligated bank. Delivery of a declaration of loss is a warranty of the truth of the statements made in the declaration. If a claim is asserted in compliance with this Subsection, the following rules apply: 96 The claim becomes enforceable at the later of (i) the time the claim is asserted, or (ii) the ninetieth day following the date of the check, in the case of a cashier's check, teller's check, or money order, or the ninetieth day following the date of the acceptance, in the case of a certified check. Until the claim becomes enforceable, it has no legal effect and the obligated bank may pay the check or, in the case of a teller's check, may permit the drawee to pay the check. Payment to a person entitled to enforce the check discharges all liability of the obligated bank with respect to the check

50 If the claim becomes enforceable before the check is presented for payment, the obligated bank is not obliged to pay the check. When the claim becomes enforceable, the obligated bank becomes obliged to pay the amount of the check to the claimant if payment of the check has not been made to a person entitled to enforce the check. Subject to R.S. 10:4-302(a)(1), payment to the claimant discharges all liability of the obligated bank with respect to the check. 98 If the obligated bank pays the amount of a check to a claimant under Subsection (b)(4) and the check is presented for payment by a person having rights of a holder in due course, the claimant is obliged to (i) refund the payment to the obligated bank if the check is paid, or (ii) pay the amount of the check to the person having rights of a holder in due course if the check is dishonored

51 If a claimant has the right to assert a claim under Subsection (b) and is also a person entitled to enforce a cashier's check, teller's check, certified check, or money order which is lost, destroyed, or stolen, the claimant may assert rights with respect to the check. 100 HONOR VERSUS DISHONOR OF A CHECK (a) Except as otherwise provided in this Chapter, a payor bank wrongfully dishonors an item if it dishonors an item that is properly payable, but a bank may dishonor an item that would create an overdraft unless it has agreed to pay the overdraft

52 (b) A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. (c) A payor bank's determination of the customer's account balance on which a decision to dishonor for insufficiency of available funds is based may be made at any time between the time the item is received by the payor bank and the time that the payor bank returns the item or gives notice in lieu of return, and no more than one determination need be made. 102 If, at the election of the payor bank, a subsequent balance determination is made for the purpose of reevaluating the bank's decision to dishonor the item, the account balance at that time is determinative of whether a dishonor for insufficiency of available funds is wrongful

53 STALE DATED CHECKS A financial institution is under no obligation to a customer having a checking account to pay a check, other than a certified check, which is presented more than six months after its date, but it may charge its customer s account for a payment made thereafter in good faith. 104 POST-DATED CHECK NOTICES A financial institution may charge against the account of a customer a check that is otherwise properly payable from the account, even though payment was made before the date of the check, unless the customer has given notice to the financial institution of the postdating, describing the check with reasonable certainty. The notice is effective for the period stated for stop payment order and must be received at such time and in such manner as to afford the financial institution a reasonable opportunity to act. Post-dated check notice: Oral notice 14 days Written notice six months

54 DEATH NOTICE OR INCOMPETENCE The financial institution s ability to pay checks after death and incompetence is not rendered ineffective until we have knowledge of the customer s death. May pay checks for 10 days after the date of death unless ordered to stop payment by a person claiming an interest in the account. 106 CUSTOMER S DUTY: NEGLIGENCE If the customer is negligent in the handling of their checkbook and checks are subsequently stolen and the signature is forged or checks are altered, it is the customer who is responsible. Examples of this are: Check book left on top of car and falls off after person drives away and checkbook is found by another who uses the checks and forges the signature

55 A big blank space is left after ten and a crook puts in ten thousand on a check that was supposed to be for $10. A business does not lock up its checks and a janitor steals one and gets it cashed 108 CUSTOMER S DUTY: BANK STATEMENT RULE A customer has a responsibility to read their statement every month and report alterations and forgeries. If they do not report them the financial institution is not responsible unless there is a problem with the financial institution and then the financial institution is responsible for up to one year

56 EMPLOYER S RESPONSIBILITY FOR FRAUDULENT INDORSEMENT BY EMPLOYEE An employer who hires an employee who has responsibility regarding the handling of checks is responsible for their behavior if there is a fraudulent indorsement of checks of the employer. 110 CASHING CORPORATE CHECKS The issue of cashing corporate checks is still high risk activity for financial institutions. Financial institutions have very good defenses under UCC and when a corporate employee forges the maker s authorized signature. However, the financial institution does not have any defenses when the financial institution allows a check payable to a corporation to be cashed or deposited into a personal account. Please consult your financial institution s attorney before continuing in this practice

57 Lesson: Regulation CC 112 INTRODUCTION Effective Date: 1988 Covered Institutions: Insured Bank, Mutual Savings Bank, Savings Bank and Insured Bank or a bank that is eligible to be insured. Purpose: To make funds available to consumers along federally mandated guidelines. To expedite the check collection systems and make disclosures of schedules available to consumers. Record Retention: Two years. Civil Liability: Any actual damages sustained by the person conducting the transaction. In an individual action, not less than $100 and not more than $1000. In a class action, a total recovery of not more than $500,000 or 1% of the financial institution s net worth, whichever is less

58 BUSINESS DAY AND BANKING DAY 114 Business Day A calendar day that excludes (weekends and federal holidays): Saturday Sunday January 1* Third Monday in January 1 Third Monday in February Last Monday in May July 4 th * First Monday in September Second Monday in October November 11* Fourth, Thursday in November December 25*

59 *If these dates fall on Sunday the next Monday is not a business day. A business day is still a business day even if the financial institution is not open. For example, Mardi Gras is a business day even though in New Orleans financial institutions are closed because Mardi Gras is not a Saturday, a Sunday or a federal holiday. 116 Banking Day A banking day is a day during which the financial institution is open for carrying on all of its business. Since business days are not Saturdays, a banking day is never a Saturday even if the financial institution is open for substantially all of its business. Financial institutions can set cut off times for accepting deposits. Under Regulation CC, the cut-off period should be no earlier than 2:00 p.m. unless it is an ATM which can have a cut-off of 12:00 noon. There are some exceptions to this if the financial institution closes earlier

60 CHECKS 118 Check Definition A negotiable demand draft drawn on or payable through or at an office of a bank; A negotiable demand draft drawn on a Federal Reserve Bank or a Federal Home Loan Bank; A negotiable demand draft drawn on the Treasury of the United States; A demand draft drawn on a state government or unit of general local government that is not payable through or at a bank; A United States Postal Service money order; or A traveler s check drawn on or payable through or at a bank

61 Check All U.S. checks that are not next day items will be other or what are now local checks 120 AVAILABILITY SCHEDULES

62 TYPES OF ITEMS Next Day Items All other Checks Available Next Day First $200 of Other checks (Went to $200 on July 21st) 2 nd Business Day 122 AVAILABILITY SCHEDULE: NEXT DAY ITEMS Type of Deposit Definition CASH Coin and Currency ELECTRONIC PAYMENT Wire Transfer and ACH transfer. Conditions for next day availability. Funds are next day available if: Deposited to an employee of a depositary bank. Upon receipt of actually and finally collected funds which are posted to the customer s account If funds do not meet conditions, the funds become: 2 nd business day if it is deposited by mail, at a proprietary ATM, or other means Available for withdrawal not later than the business day after the banking day on which the financial institution received the electronic payment. (This one is slightly different than the others. It always is next day from day of receipt.) US TREASURY CHECK Deposited into Payee s account. Check drawn on the treasury of the and have a routing number beginning with the digits Deposited to an employee of the depositary bank. STATE GOVERNMENT CHECK Check from the state, the,, or the US Virgin Islands LOCAL GOVERNMENT CHECK Check from any city, county, parish, town, township, village, or other general purpose political subdivision of a state. Does not include special purpose units of government, such as school districts or water districts. Deposited into payee s account. Use special deposits slips if financial institution requires. Depositary institution in same state as check drawn. Deposited to an employee of the depositary bank. Deposited into payee s account. Use special deposit slips if financial institution requires. Depositary unit located in same state as local government. Check drawn on unit of general local government. Other Check Other Check Other Check *FI = Financial Institution

63 Type of Deposit Definition Conditions for next day availability. Funds are next day available if: If funds do not meet conditions, the funds become: POSTAL MONEY ORDER Deposited to an employee of Depositary bank. Deposited into payee s account. Other Check ON US CHECK Check drawn on same financial institution or another branch of the same financial institution. Checks deposited in a branch of the depositary Other Check bank and drawn on the same or another branch of the same financial institution, if both branches are located in the same state or checkprocessing region. CASHIER S CHECK 1. Check that is drawn on the financial institution. 2. Signed by an officer or employee of the FI *; on behalf of the FI as drawer. 3. Is provided to a customer of the FI or acquired from the FI for remittance purposes. Deposited to an employee of the depositary bank. Deposited into the payee s account. Use special deposit slip if financial institution requires. Other Check CERTIFIED CHECK A check to which the drawee FI certifies by signature on the check of an officer or other authorized employee of the FI (1) the signature of the drawer on the check is genuine; and (2) That the bank has set aside funds which are equal to the amount of the check and will be used to pay the check. Deposited to an employee of a depositary bank. Deposited into payees account. Use special deposit slip if financial institution requires. Other Check *FI = Financial Institution 124 Type of Deposit Definition Conditions for next day availability. Funds are next day available if: Availability of conditions in Column 2 are not met becomes: TELLER S CHECK A check provided to a customer of a FI or acquired from FI for remittance purposes, that is drawn by the FI, and drawn on another FI or payable through or at a FI Depositedtoanemployeeofthe depositary bank. Deposited into the payee s account. Use special deposit slip if the financial institution requires. A Other check A Other check. A Other check. FEDERAL RESERVE OR FEDERAL HOME LOAN BANK CHECK Depositedtoanemployeeofthe depositary bank. Deposited into payee s account. A Other check A Other check. $200 OF OTHER CHECKS not subject to next day availability Except for nonproprietary ATM s which $200 of Other checks must be available the next day after day of deposit. N/A the $200 is available the second business day of deposit. The portion of the customer s deposit to which the $200 must be applied is at the discretion of the depositary bank as long as it is not applied to any checks subject to next day availability. *FI = Financial Institution

64 AVAILABILITY SCHEDULE FOR REGULAR ITEMS Other CHECKs (ALL OTHER CHECKS BESIDES NEXT DAY) Available the 2 nd business day after the banking day of deposit. NONPROPRIETARY ATM Located off premises. (Proprietary ATM is treated as deposits to the branch). Contractual branch. May have a noon cut off. Deposits of cash, next day checks, andallotherchecksmust be made available by the 5th business day following the banking day of deposit. First $200 of the aggregate deposit at a nonproprietary ATM on any one banking day must be made available for withdrawal on the 5 th (Proposed 4) business day after the banking day of deposit. CASH WITHDRAWAL Day funds become available after 5:00 p.m. Next $400 Cash (financial institutions may extend by one business day the time that funds, deposited into an account by checks, are available for cash, wiring, cashier check, teller s check, or certified check purchase.) EXCEPTIONS (1) Extend one business day. (1) Extension of schedule for certain deposits in Alaska, Hawaii, Puerto Rico and US Virgin Islands. (2) Extend one business day. (2) Extensions of schedule for check deposited on or payable at or through a paying bank not located in the same state as the depositary bank. 126 WHEN FUNDS ARE CONSIDERED DEPOSITED The time funds must be made available for withdrawal is determined by the day the deposit is made

65 Staffed Teller ATM Where Funds Are Received When Deposit Is Considered Made When received by teller. When placed in the ATM. Lobby Box that is accessible to customers only during regular business hours (except if notice appears on box and they are treated as night depositories) When placed in the Lobby box. Funds mailed to Depositary Bank When received by the depositary bank. When the deposit is removed and the contents of the Night Depositary or Lockbox deposit are accessible to the depositary bank for processing. Off premise ATM if funds are not normally removed more than twice a week When they are removed from the ATM. Deposits made after financial institution is closed or after cut off On the next banking day. 128 PLACING A HOLD

66 TO PLACE A HOLD OR NOT? How to Decide whether to place a hold or not Customer Check How long has customer been with your institution How much available balance Any overdraft history Delinquent loans Recurring payroll ACH Local or out of state Check amount Have you seen this type of check before? Unusual markings? Good routing number? Stale-dated or post-dated? 130 AFTER DECIDING TO PLACE HOLD What kind of hold? Is the accountholder in the first 30 days of opening an account? No Yes Choose Reason: Repeated over drafter Reasonable cause Redeposited item Large deposits Or If a local check can use Case-by-Case Hold Special rules for new accounts if your financial institution uses Cash-next day Next day items-first $5000 next day and balance in 9 days Plus travelers checks Local checksfinancial institution policy

67 If you have same day or next day availability you will have two options: Case by case holds Exception holds 132 If you have delayed availability as your general policy then you will only have exception holds

68 Type of Hold Case by Case Hold Use when financial institution s policy is same day or next day SUMMARY OF HOLDS for Next Day Policies Large Deposits Next day items Useforaggregatedepositsover$5000(All numbers will index every Other checks five years) (AllChecks) Redeposited items Use for checks that are being deposited a second time Checks What business day available (proposed) $200 Other Checks (All other checks except 2 nd day Yes next day items) Next day items Other checks (All Checks) 7 th day /4th day 7 th day/4th days No Yes (Could be more than $200 depending on check could be $5000) Repeated Overdrafter Overdrawn six days in six months or 2 days in six $5,000 *Could have been overdrawn if financial institution paid the check Next day items Other checks (All Checks) 7 th day /4 th day No Reasonable Cause to Doubt Collectibility Next day items Use when financial institution has reason to doubt collectibility See Other checks hold form (All Checks) 7 th day/4th day No Emergency Conditions Hurricanes, tornadoes Next day items Other checks (All Checks) 7 th day/4th day No 1 Next day items st $5,000 next day/over New Accounts Check to see if your institution uses special rules $5,000 9 days Other checks Use first thirty days accountholder with financial institution. Do not $5000 will index with (All other checks except next day give hold notice. inflationo LC Financial items) Institution s policy No 134 When Does The $200 Rule Apply? Type of Hold Case by Case Large Deposits Repeated Overdrafts Redeposited Items Reasonable Cause Emergency Conditions New Accounts $200 Cash Rule Apply Yes Yes No No No No No

69 Lesson : BSA an Introduction 136 PURPOSE OF BSA The Bank Secrecy Act, enacted in 1970, authorizes the Secretary of the Treasury to require certain records or reports where they have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism

70 The authority of the Secretary to administer Title II of the Bank Secrecy Act (codified at 31 U.S.C with implementing regulations at 31 C.F.R. Part 103) has been delegated to the Director of the Financial Crimes Enforcement Network(FINCEN). 138 The U.S. Department of the Treasury established the Financial Crimes Enforcement Network in 1990 to provide a government-wide multisource financial intelligence and analysis network. The organization's operation was broadened in 1994 to include regulatory responsibilities for administering the Bank Secrecy Act, one of the nation's most potent weapons for preventing corruption of the U.S. financial system

71 Hundreds of thousands of financial institutions are subject to Bank Secrecy Act reporting and recordkeeping requirements. These include depository institutions (e.g., banks, credit unions and thrifts); brokers or dealers in securities; insurance companies that issue or underwrite certain products; money services businesses (e.g., money transmitters; issuers, redeemers and sellers of money orders and travelers' checks; check cashers and currency exchangers); casinos and card clubs; and dealers in precious metals, stones, or jewels. 140 The USA PATRIOT Act of 2001, enacted shortly after the 9/11 attacks in America, broadened the scope of the Bank Secrecy Act to focus on terrorist financing as well as money laundering. The Act also gave the Financial Crimes Enforcement Network additional responsibilities and authorities in both important areas, and established the organization as a bureau within the Treasury Department

72 A customer exchanges smaller denomination bills for larger ones. A customer exchanges smaller cashier's checks for one large one. A customer converts cash to cashier's checks. The individual does not count currency prior to handing it to the teller. The individual engages in numerous cash transactions below the $10,000 limit to avoid CTR filing requirement. Cashier's checks are made payable to common names (i.e., John Smith, Robert Jones, Jose Garcia, etc.) The purchaser provides a fictitious name for cashier's check. The customer is hesitant to provide identification or provides minimal or fictitious identification. 142 An individual makes large cash deposits or withdrawals closely followed or preceded by foreign wire transfers. An individual or business that normally does not use wire transfers sends or receives wire transfers. A person who is known not to have a readily available source of income or who has a known criminal background makes large deposits and withdrawals. Large cash deposits are made by an individual or business that does not normally deposit large amounts of cash. Business accounts lacking normal business activity are used to temporarily hold funds for transfer to foreign bank accounts. A customer maintains several accounts and transfers funds between accounts with no apparent business purpose. Prepared by U. S. Customs Service

73 POTENTIALLY SUSPICIOUS ACTIVITY THAT MAY INDICATE MONEY LAUNDERING (BY INTERACTION OR TRANSACTION TYPE) Customers Who Provide Insufficient or Suspicious Information Efforts to Avoid Reporting or Recordkeeping Requirement Funds Transfers Automated Clearing House Transactions Activity Inconsistent with the Customer s Business Lending Activity Changes in Bank-to-Bank Transactions Cross-Border Financial Institution Transactions Trade Finance 144 Privately Owned Automated Teller Machines Insurance Shell Company Activity Embassy and Foreign Consulate Accounts Employees Other Unusual or Suspicious Customer Activity

74 STRUCTURING Structuring transactions to evade BSA reporting and certain recordkeeping requirements can result in civil and criminal penalties under the BSA. Under the BSA (31 USC 5324), no person shall, for the purpose of evading the Currency Transaction Report (CTR) or a geographic targeting order reporting requirement, or certain BSA recordkeeping requirements: 146 Cause or attempt to cause a bank to fail to file a CTR or a report required under a geographic targeting order or to maintain a record required under BSA regulations. Cause or attempt to cause a bank to file a CTR or report required under a geographic targeting order, or to maintain a BSA record that contain a material omission or misstatement of fact. Structure, as defined above, or attempt to structure or assist in structuring, any transaction with one or more banks

75 How should banks handle repeated or continuing suspicious activity on one account or by one person/customer? One of the purposes of filing SARs is to identify violations or potential violations of law to the appropriate law enforcement authorities for criminal investigation. This is accomplished by the filing of a SAR that identifies the activity of concern. Should this activity continue over a period of time, it is useful for such information to be made known to law enforcement (and the bank supervisors). 148 As a general rule of thumb, organizations should report continuing suspicious activity with a report being filed at least every 90 days. This will serve the purposes of notifying law enforcement of the continuing nature of the activity, as well as provide a reminder to the organization that it must continue to review the suspicious activity to determine if other actions may be appropriate, such as terminating its relationship with the customer or employee that is the subject of the filing

76 Should our bank close an account with continuing suspicious activity? The closure of a customer account as the result of the identification of suspicious activity is a determination for an organization to make in light of the information available to the organization. A filing of a SAR, on its own, should not be the basis for terminating a customer relationship. Rather, a determination should be made with the knowledge of the facts and circumstances giving rise to the SAR filing, as well as other available information that could tend to impact on such a decision. It may be advisable to include the organization s counsel, as well as other senior staff, in such determinations. 150 Under what circumstances can the filing deadline for SARs be extended? The SAR rules require that a SAR be filed no later than 30 days from the date of the initial detection of the suspicious activity, unless no suspect can be identified, in which case, the time period for filing a SAR is extended to 60 days

77 CHANGES TO MONETARY INSTRUMENTS LOG As of October 17, 1994 the monetary instruments log requirement was eliminated. The bank must still maintain the records, but may keep that information in any format that it likes. This pertains to sales of money orders, traveler's checks, and other monetary instruments. 152 Information Required, if Purchaser is a Customer of the Bank Purchaser's name. Number of the purchaser's account. Date of purchase. Branch where the purchase occurred. Types, serial numbers, and the dollar amounts of each of the instruments purchased in currency

78 Information Required, if Purchaser is not a Customer Name and address of purchaser. Social Security number of purchaser or alien identification number. Purchaser's date of birth. Date of purchase. Branch where the purchase occurred. Types, serial numbers, and dollar amounts of the instruments being purchased. For cashier's checks and bank checks or drafts, payee on the instruments purchased. Amount of the purchase in currency. 154 Third party is purchasing If someone is purchasing for third party, the financial institution must get the same information required on the third party based on whether the third party is an account holder or not an account holder. The information must be verified by driver's license or other identification if elderly or a law enforcement officer

79 Amount Sales are to be aggregated including the fee. Information must be kept for five years on any purchase totaling $3,000 or more in one given day. Multiple sales must be added together even if buying different instruments. 156 FUNDS TRANSFERS Wire transfer laws took effect on May 28, Wire transfers involving less than $3,000 are exempt. Funds transfers & transmittals of funds include internal transfers -- when a bank transfers funds from an originator's account to a beneficiary's account at the same bank if the originator and beneficiary are different parties

80 The bank must retain either the original, microfilm or other copy, or electronic record of the following information relating to the payment order: the name and address of the originator (type of identification reviewed); the amount of the payment order; the execution date of the order; any payment instructions; and the identity of the beneficiary's bank. 158 Plus, if possible: the name and address of the beneficiary; the account number of the beneficiary; and any other information that specifically identifies the beneficiary

81 Noncustomers If the order is made in person by a noncustomer, you will need a record of his or her identification (driver's license or passport) and Social Security number. If the order is not made in person, you must get the information previously requested plus a copy of the method of payment (check, credit card). 160 Record Retention Customers -- you must be able to retrieve information by account number and name. Non-Customers -- you must be able to retrieve information by originator s name. Records must be kept five (5) years. If agencies call to request the information, your bank may charge them a "reasonable" amount to retrieve it

82 Exemptions A domestic bank. A wholly owned domestic subsidiary of a domestic broker or dealer in securities. The United States. A state or local government or government agency. A non-bank financial institution. A funds transfer in which the originator and beneficiary are the same and the bank is the same (even across state lines). 162 Also: Transfers of less than $3,000. Transfers governed by Electronic Funds Transfer Act, as well as any funds transfers made through ATM, ACH, and POS systems. Debit transfers

83 Verification Primary identification must be obtained for the individual. 164 Funds Transfer The rule applies to funds transfers and transmittals of funds. It includes all funds transfers that are made within the United States when a bank transfers funds from an originator's account to a beneficiary's account at the same bank (if the originator and beneficiary are different parties), as well as orders made in person or by telephone, facsimile, or electronic messages sent or delivered by a customer or by a financial institution for a customer

84 Lesson: Fraud-Kiting and Postal Money Orders 166 CHECK KITING Check kiting is a form of fraud involving the sloshing of theoretical funds between two bank checking accounts. A check written to the criminal from one bank is deposited, and more importantly credited, to an account at a second bank. Because that second bank now shows a positive balance, the criminal can withdraw enough money to deposit back into the first bank before the check bounces for lack of funds

85 POSTAL MONEY ORDERS Americans trust the U.S. Postal Service and the security provided by the U.S. Postal Inspection Service. Consumers often believe, incorrectly, that postal money orders and cashier's checks are "good" if they're cashed by a bank and are not subject to recourse. This is not true

86 Thanks for participating! Deborah L. Crawford Gettechnical Inc TTS Mark Bennett Upcoming Webinars August 18 th - Mortgage Loan Originator Required Training Series - Part II August 18 th Vital Issues on Cashier s Checks August 19 th - Flood Insurance Fundamentals - New Rules Announced August 20 th - Basic Cash Flow Analysis August 20 th - Compliance Perspectives: A Monthly Update August 25 th - All About the New FFIEC Cybersecurity Assessment Tool August 27 th - Appraisal Review for Residential Mortgage Decisions September 3 rd - RC-C Loan Coding and Related RC-R Reporting September 9 th - Navigating the Top Fifty (50) Most Important Safe Deposit Box Operating Procedures September 10 th - Controlling the Risks of Power of Attorney Documents Gettechnical Inc. 86